Boeing and Embraer have been discussing a deal that would involve a relatively large premium to the Brazilian company's market capitalization of $3.71 billion, the WSJ reported. (on.wsj.com/2Dn6SjQ)

Embraer’s shares were up 21 percent in both Sao Paulo and New York. Boeing’s shares were little changed.

The report comes about two months after Boeing rival Airbus SE agreed to buy a majority stake in Bombardier Inc’s CSeries jetliner program. Reuters reported then that the CSeries deal could push Boeing and Embraer closer together. .

Such a move has long been contemplated in private, according to industry sources.

Boeing and Embraer already work on projects including runway safety and alternative jet fuels. Their partnership has intensified in recent years to include Boeing’s commitment to joint sales and support of Embraer’s KC-390 military aircraft.

The WSJ reported on Thursday that the talks were on hold as the companies were waiting for the Brazilian government’s response on whether it would approve the deal.

Boeing is willing to take steps to protect Embraer’s brand, management and jobs to help entice the government and is also willing to structure a deal that would protect the government’s interest in Embraer’s defense business, the WSJ reported.

The Brazilian government holds a “golden share” in Embraer, a state-run company that was fully privatized in 2006, giving it the right to veto changes in controlling ownership and changes to its military programs.

In September, Brazil’s Finance Ministry asked a federal audit court to study how the government could exit the so-called golden share it holds in former state monopolies that have been partially or fully privatized in recent years.

Embraer and Boeing were not immediately available for comment. (Reporting by Arunima Banerjee, Tim Hepher and Brad Haynes; Editing by Saumyadeb Chakrabarty)